Chapter 11. Impracticability Of Performance And Frustration Of Purpose (261-272) Flashcards
A and B make a contract under which B is to pay A $1,000 and is to have the use of A’s window on January 10 to view a parade that has been scheduled for that day. Because of the illness of an important official, the parade is cancelled. B refuses to use the window or pay the $1,000. Is B’s duty discharged? Is there a breach?
B’s duty to pay $1,000 is discharged, and B is not liable to A for breach of contract. Restatement 2d of Contracts § 265(a)
A contracts with B to print an advertisement in a souvenir program of an international yacht race, which has been scheduled by a yacht club, for a price of $10,000. The yacht club cancels the race because of the outbreak of war. A has already printed the programs, but B refuses to pay the $10,000. Is B’s duty discharged? Is there a breach? What claim, if any, might A have against B?
B’s duty to pay $10,000 is discharged, and B is not liable to A for breach of contract. A may have a claim under the rule stated in § 272(1). Restatement 2d of Contracts § 265(a)
A, who owns a hotel, and B, who owns a country club, make a contract under which A is to pay $1,000 a month and B is to make the club’s membership privileges available to the guests in A’s hotel free of charge to them. A’s building is destroyed by fire without his fault, and A is unable to remain in the hotel business. A refuses to make further monthly payments. Is A’s duty discharged? Is there a breach?
A’s duty to make monthly payments is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 265(a)
A leases neon sign installations to B for three years to advertise and illuminate B’s place of business. After one year, a government regulation prohibits the lighting of such signs. B refuses to make further payments of rent. Is B’s duty discharged? Is there a breach?
B’s duty to pay rent is discharged, and B is not liable to A for breach of contract. See Illustration 7 of § 265. Restatement 2d of Contracts § 265(a)
A contracts to sell and B to buy a machine, to be delivered to B in the United States. B, as A knows, intends to export the machine to a particular country for resale. Before delivery to B, a government regulation prohibits export of the machine to that country. B refuses to take or pay for the machine. Is B’s duty discharged? Is there a breach? Why?
If B can reasonably make other disposition of the machine, even though at some loss, his principal purpose of putting the machine to commercial use is not substantially frustrated. B’s duty to take and pay for the machine is not discharged, and B is liable to A for breach of contract. Restatement 2d of Contracts § 265(a)
A leases a gasoline station to B. A change in traffic regulations so reduces B’s business that he is unable to operate the station except at a substantial loss. B refuses to make further payments of rent. Is B’s duty discharged? Is there a breach? Why?
If B can still operate the station, even though at such a loss, his principal purpose of operating a gasoline station is not substantially frustrated. B’s duty to pay rent is not discharged, and B is liable to A for breach of contract. The result would be the same if substantial loss were caused instead by a government regulation rationing gasoline or a termination of the franchise under which B obtained gasoline. Restatement 2d of Contracts § 265(a)
A leases neon sign installations to B for three years to advertise and illuminate B’s place of business. After one year, a government regulation prohibits the lighting of such signs. The government regulation provides for a procedure under which B can apply for an exemption, but B, in breach of his duty of good faith and fair dealing (§ 205), fails to make such an application. Is B’s duty discharged? Is there a breach?
Unless it is found that such an application would have been unsuccessful, B’s duty to pay rent is not discharged, and B is liable to A for breach of contract. Cf. Illustration 11 to § 261. Illustration 3 to § 264. Restatement 2d of Contracts § 265(b)
